The UK’s rampant mess masquerading as a coherent taxation system has again been tampered with in a fashion which actually I disagree with viscerally. All manner of minority opt outs and so forth – even for a product as beneficial as SIBs – only creates confusion and encourages tax avoidance as opposed to coherent investment. Some will rejoice in the short term gain for SIBs et al but I can’t help but feel now the product is being pushed into a silo of ‘needs tax support to survive’ – that is bad bad bad imho as it enshrines those with cash and makes it more difficult for social mobility.
Better news from the Caribbean where the IADB is encouraging SIB issuance which promises to be very exciting indeed!
The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group, will launch a $5.3 million program to test a new social sector financing model called Social Impact Bonds in Latin America and the Caribbean. SIBs offer opportunities for private investors to participate in developing and delivering services to low-income or vulnerable populations.
A SIB is a partnership in which socially-motivated private investors provide capital to nongovernmental organizations (NGOs) or private service providers to implement programs targeted at poor and vulnerable populations. The government commits to repay investors based on the degree to which social outcomes improve, which is verified through a rigorous impact evaluation. If outcomes fail to improve, investors do not recover their full investment, thereby transferring the performance risk of the program away from governments and taxpayers.
The SIB model, first developed in 2010, is already being tested and expanded in the U.S., Israel, Australia, and the United Kingdom, and has the potential to become a transformational social innovation for the Latin American and Caribbean region.
The MIF’s SIB facility will focus on developing the right conditions to create the ecosystem that is necessary for the SIB market to develop and grow. This includes identifying social needs and potential interventions, assessing the legal framework and feasibility for SIBs, as well as engaging local partners and investors. The MIF will provide training and advisory support to build the capacity of potential actors interested in the model.
Budget 2014: Rate Of Social Investment Tax Relief To Be 30 Per Cent
Vibeka Mair – Civil Society
The Chancellor of the Exchequer has announced that the new social investment tax relief will be set at a 30 per cent rate, and will be worth £35m a year to social investors by 2018/19.
The relief will offer an income tax rebate to those making unsecured investments in asset-locked bodies – charities, community interest companies and community benefit societies – and in social impact bonds.
Big Society Capital, the social lender wholesaler, had called for the government to set the level of relief an investor can reclaim at 30 per cent, equivalent to that available to investments under an existing scheme, the enterprise investment scheme, for investors buying shares in small, profit-making businesses.
SITR will be available from 6 April, for organisations with a maximum number of 500 staff. Organisations will be able to receive up to £290,000 over three years under the scheme.
The 30 per cent rate is higher than the 25 per cent for 40 per cent rate taxpayers reclaiming when they donate to charity and lower than 31.25 per cent for 45 per cent rate payers using gift aid.